Is home buying a good idea? Do you rent out your home when you PCS? Has renting a home given you an advantage financially?

CPT Private RallyPoint Member — Tue, 27 Jan 2015 12:25:00 -0500

I currently have been debating this topic since I joined Active Duty not too long ago. I have heard both sides of the story, good and bad for both, and would like the input from fellow RP members who have been through this situation already. Is home buying a good idea? Do you rent out your home when you PCS? Has renting a home given you an advantage financially?

I realize that there are a multitude of factors for home buying but in general would like to know your story.

What say you RP?

Response by SGT Steven Eugene Kuhn MBA made Jan 27 at 2015 4:44 PM

SGT Steven Eugene Kuhn MBA — Tue, 27 Jan 2015 16:44:20 -0500

Hard to say, it all depends on the situation.
-As long as you are in and do not know where you will ETS to, renting is less of a headache.
-As a wealth builder, real estate is not such a bad investment (in good locations) but beware of tenants who squat, do not pay and destroy the home.
-You can always use the VA Mortgage benefit upon ETS'ing.
As a suggestion you may wish to try this:
Set the goal on your budget, start now with saving and slowly planning the dream house, once you decide where you will be living after ETS, you will have the down payment saved and all the "cool" ideas ready to go for the dream.
I personally cannot stand debt, refuse to make any (I live in Europe, I buy a 500 sq foot apartment for the same price as 5 acres and a house in the USA)
Good luck!
Steven
Good luck!
Steven

Response by SGT(P) Harry Clyde Jr. made Jan 27 at 2015 5:05 PM

SGT(P) Harry Clyde Jr. — Tue, 27 Jan 2015 17:05:50 -0500

Id say dont buy till you settle for good. I bought my first and only home when I PCSd to Benning in 06. Bought the house 2 months later. We knew this was my last duty station before retirement and wife was adamant about never moving again.
Theres too many variables to buying if not intending to go back permanently ie renters, maiintenance, market crash etc.
My brother, against my advice, bought a house while stationed in Charleston SC (Air Force).
When he PCSd to Delaware he couldnt sell it. Had renters that did some damage and is now in Nevada with a mortgage and paying rent with a house in SC that is empty right now and he isnt sure in the long run if he and his family are going to settle there.
Do the research and do whats best for you, your family, finances and piece of mind. You can make money from it but can also lose big time.

Response by LTC Private RallyPoint Member made Jan 27 at 2015 9:57 PM

LTC Private RallyPoint Member — Tue, 27 Jan 2015 21:57:13 -0500

CPT Private RallyPoint Member I am personally renting until I find a place to find my retirement home/place. Otherwise I would just be getting into debt and have to pay for a mortgage and then pay rent at the next location. I have seen others try to buy a home and then try to sell before they PCS. I have seem many fail to either sell or have a loss. Others rent to others and I have seen that be an issue.

Response by PO2 Stephen Brinkley (Scott) made Jan 27 at 2015 10:07 PM

PO2 Stephen Brinkley (Scott) — Tue, 27 Jan 2015 22:07:29 -0500

CPT Private RallyPoint Member, sir you really needed a other button. This is why: How long will you be stationed at Fort Benning, GA? If you know for a fact that you will be their for 4 years, then I would answer yes, buy a home. If you are not going to be living their for 4 years or more then I would tell you no. Here is why: You would not hit any of your principle on the loan until your 4th year. So the first three years of owning your home and making the normal payment per month you would only put about 10% toward the principle. Now if you plan to make extra payments and it would go directly to the principle then go for it. But understand that if you buy a home under the VA program and you leave the area, it is against their regulations of the loan to rent your home you would be forced to sell. Selling your home with only minimal amounts going to the principle could cause you to have to sell low and either making nothing or losing.

Response by LTC Private RallyPoint Member made Jan 27 at 2015 11:37 PM

LTC Private RallyPoint Member — Tue, 27 Jan 2015 23:37:07 -0500

I buy, almost everywhere I am stationed, live in the house (gets you a better interest rate) and then rent them out when I leave. Builds up my retirement package as I have been coming along through my career. I am up to 4 house now and keep going.

Couple of things to consider once you turn it into a rental:

1) You need to have a back up fund to pay for expenses / un-rented months.

2) Look at the posts you buy in: There will always be large numbers at Fort Hood, trainees at Fort Benning (Officer side - longer duration)

3) The house becomes a tax benefit after a while (repairs, property management fees, taxes, insurance, ect).

If you would like to know more, email me.

Also, when you buy, you are paying your equity, when you rent, you are paying someone else's!

Response by SPC David S. made Jan 28 at 2015 1:30 AM

SPC David S. — Wed, 28 Jan 2015 01:30:52 -0500

Sir, with buying a home there're a lot of variables at play. How long do you plan your career to be, how many children, where do you want to retire, stability of location, market, and so on. My father was in 20+ years and only bought a home once only to sell it 2 years later. He was stationed in some places that we as a family did not even attempt to go such as Newfoundland. With there being so many things to consider I would just rent or live on base. I know its not the best way to build up equity in a home but the complications of trying to rent your home without help from a trusted friend or family can be difficult as you might find yourself half way around the world some day. Just my 2 cents.

Response by SPC Private RallyPoint Member made Jan 28 at 2015 1:32 AM

SPC Private RallyPoint Member — Wed, 28 Jan 2015 01:32:26 -0500

Just my opinion and it is what I plan on doing. Buy a real nice ball hitch camper. PCS, long TDY, not a problem just take your place with you. Some people OH I`d never live in a camper....Look around they got some fancy ones. -I recommend a small plot of land and a structure to cover the roof for wherever you may be stationed at the time- . However I have already bought my house back in my hometown. My brother is care taker and I rent it out. I wouldn't say it has given me an edge, but it will pay for itself soon. The real issue can be, do you have someone trustworthy in that area -never moving- that could check up from time to time.

Response by MAJ Jim Steven made Jan 28 at 2015 5:23 AM

MAJ Jim Steven — Wed, 28 Jan 2015 05:23:30 -0500

I own 3 houses outside of bases. So far, has worked well, one is paid off.
I have had problem renters. Each place also sits vacant for a few weeks between renters - so, budget accordingly.
However, I now just look to rent a room....and buy rentals in my planned ETS location - I have family there, brother is a property manager.

Response by SFC Nikhil Kumra made Jan 28 at 2015 6:49 AM

SFC Nikhil Kumra — Wed, 28 Jan 2015 06:49:53 -0500

I will never buy again until I have at least 50% down if not more. It's not an investment anymore, rather more of a "savings" ... with the only benefit being "living" in it...

Response by MSG Scott McBride made Jan 28 at 2015 7:01 AM

MSG Scott McBride — Wed, 28 Jan 2015 07:01:56 -0500

LT, you have received more than enough responses I think to help you decide, but in the end it's what you can afford to do. Some say they buy everywhere they go; nothing wrong with that logic if you can make it work within your financial means. Keep in mind their are property taxes, property management and maintenance fees that go along with that investment. Not a choice I would consider for every duty station, but to each his own. Certainly, a mortgage will usually be much cheaper than rent. I own 2 homes, but do not reside in either one. I am currently renting in California for a price that would easily be a mortgage. I cannot sell my 2 homes yet but believe me I will when the time is right. Hopefully your career field has you stabilized for at least 4 years or more where you can enjoy your home and area. The last 6 years of my career I moved 3 times which included a move to Europe. Good luck sir, I'm sure you will make the right decision for you and your family, if not your wife will! Army Strong!

Response by LTC Charles T Dalbec made Mar 6 at 2015 9:32 PM

LTC Charles T Dalbec — Fri, 06 Mar 2015 21:32:54 -0500

Tyler, If you think that you can guarantee that you will be located and assigned in the Fort Benning (Columbus) are - I would say go ahead and buy.

However as a 2LT I do not think that you can guarantee anything right now so I would recommend renting.

If you buy and are reassigned then you would have to vacate and rent and hire a company to manage your property.

Now how much are you saving. with Buying or renting.

Understand.

Hooah!!!

Was recently at Fort Benning and saw a lot of homes for sale/rent. Go to the web and see if what I am saying is accurate.

Charles (Chuch) T. Dalbec
LTC, Army Retired

Response by Cpl Mark McMiller made Mar 7 at 2015 12:15 AM

Cpl Mark McMiller — Sat, 07 Mar 2015 00:15:33 -0500

Short answer: Owning a home is almost always better than renting. When you rent, you pay someone else' mortgage. When you own, you pay yourself because you can usually sell the house for at least what you have in it if you keep it a while. If you sell it at a profit before it is paid off, you get the profit even though the bank actually owns it. If you can't sell it for what you have in it, you can rent it out until you can. Mortgage payments are usually lower than rent. Mortgage payments don't go up every year like rents do. Further, you get some pretty good tax breaks for owning a home that you don't get from renting. Also, with a VA loan, you don't have to come up with a down payment and you don't have to pay private mortgage insurance (PMI). If you are a low income first time home buyer, most states have programs to help you also.

The long answer: It's all about economics. You need to take note of where you live.

You don't want to buy a house in a place where people don't want to live such as a place where the economy sucks and people are moving away in droves; so Detroit would be out of the question. This is because if people don't want to live there, you will have a tough time selling or renting your home. A lot of democrat run cities and states are bad places because there are few jobs due to high taxes on companies, so there are fewer people needing housing.

You do want to buy a house in a place where people want to live such as a place where the economy is booming; a big college town; a big resort town; places with low taxes; places with good weather, maybe a place with a large military base; etc. This is because with people wanting to live there, there will usually be a demand for housing so you will have little trouble selling your home or renting it out. Cities and states run by republicans are usually good places because there are usually jobs available due to low taxes on companies, so people will be flocking there for work and will need somewhere to live.

Response by 1LT Nick Kidwell made Mar 7 at 2015 11:41 AM

1LT Nick Kidwell — Sat, 07 Mar 2015 11:41:41 -0500

For me, buying was better than renting.

Sure, I had a landlord who was responsible for everything that needed to be fixed in the home, but I was still paying all utilities, AND I was paying for someone ELSE'S home equity.

After the housing bubble popped in my area, the EXORBITANTLY high prices came down to more sane levels, and my wife and I pulled the trigger on our 3-year house search.

As it stands, when you count all of the long- and short-term benefits of buying a home, especially if you get a LOW interest rate, it's better in the long run. We ended up paying about the same amount out-of-pocket as when we were renting, but on our own home and our own equity.

You need to do your homework, though...home values in the area, real-market value, what the owners paid on the home (a matter of public record in many areas), what interest rate you can lock in, and whether the home is short-term then a flip or a long-term investment.

Also helps to have a feel for what will be happening in the area in the near future, such as picturesque ag land getting subdivided for tract-homes due for building in the next 5 years, school district plans to build a nice new school in the area, etc.

Response by Sgt Tom Vaughn made Mar 7 at 2015 11:49 AM

Sgt Tom Vaughn — Sat, 07 Mar 2015 11:49:26 -0500

LT. To me it
Would be more of how long will I be in the area. And what state , if you have to sell to move across country. What states becomes important because like here in Montana your house might be on the market for 4 years before you get your first offer , my sons , all Marines have bought and or rented all in south California. Ones know in Japan for 4 years They rented the house out but it's south cal and they can't find any renters wanting to pay $2,400 a month
I would say buy its s good investment. But just depends on where you are and I think what type of MOS. You are in
Good luck Sir. Thank you for serving our country

Response by SSgt Private RallyPoint Member made Mar 7 at 2015 8:06 PM

SSgt Private RallyPoint Member — Sat, 07 Mar 2015 20:06:56 -0500

There are a lot of factors that play into this question. However I am a firm believer in buying. The way I see it I can rent a house and pay someone else's mortgage or I can buy my own place and let the military pay my mortgage. The best advice I can give is to live BELOW your means. What I mean is find a house that needs work and buy it cheap. Make some improvements on it while you are stationed there and watch your equity rise. That way when you do get orders you can rent it or sell it and still see a profit.

Response by Maj Diane Varni made Oct 23 at 2021 10:09 PM

Maj Diane Varni — Sat, 23 Oct 2021 22:09:14 -0400

Buy a home - I bought at each duty station, sold some, rented others. Now this is ongoing income and helped pay college for my kids.

Response by Maj Diane Varni made Oct 23 at 2021 10:20 PM

Maj Diane Varni — Sat, 23 Oct 2021 22:20:36 -0400

Consider if the PITI is equal to to less than the house payment from day one. This means you can get early orders or deployment and still have house payment made. Also many overlook tenants pay for month to comr and owners pay for month that happened. I factor this in my cash flow. This is the only investment somone can pay for - for you.

Response by LTC Private RallyPoint Member made Mar 29 at 2023 4:27 PM

LTC Private RallyPoint Member — Wed, 29 Mar 2023 16:27:59 -0400

I wish when I was a young single officer I would have bought a 4plex at my first duty station, lived in one and rented the others.

It depends on the market but I did well buying at a few places. I only kept one house long term. I've had the same renters for 12 years now.